Our Progressive Ruling Class: “Investments – we can do ANYTHING with your money! Yeah, I know – including lying about what “investment” means – yet another instance of redefining the common language to further an ideological agenda which in this case is a crass attempt to make you think that government NEVER “spends” your money but “invests”. And then uses crazy means to artificially create an “ROI” that I just shake my head at. Interesting fact that I didn’t know over at Anti-Planner(reformatted, emphasis mine):
According to the Congressional Budget Office, the federal deficit in 2016 was $590 billion. But the federal debt in 2016 grew by $1.4 trillion. That means the debt grew by about $800 billion more than the deficit. How can that be? The answer is that Congress uses all kinds of accounting tricks to pretend that money it borrows isn’t part of the deficit. You can read a complete list of those accounting tricks in an article by Dr. Lacy Hunt (you’ll have to get a free subscription to John Mauldin’s newsletter to read the article, which is well worth doing if you are at all interested in macroeconomic issues).
From the Antiplanner’s point of view, the most important accounting trick is that some spending from borrowed money is regarded as “an investment,” and so isn’t counted in the deficit. This includes student loans and highway and transit spending. In 2016, Congress borrowed $70 billion to pay for highways and transit, yet that isn’t included in the $590 billion deficit.
Who knew!
The Anti-Planner agrees with me and makes this rather plainly:
Someone needs to explain to Congress the difference between consumption spending and investments. Investments are supposed to produce a return. Assuming they are repaid, student loans produce a return. But no one expects that highway or transit spending will ever return money to the Treasury.
I, as a former capitalist (TMEW and I owned a small business) made a lot of investments when we bought an all-but-dead daycare. I had a purpose for each dime we laid out and in a myriad of ways, it was to get that dime back plus a reasonable return on that dime – money is not just thrown around. I can back up the Anti-Planner’s claim on transit – look at most transit systems in dense urban and you’ll find that if they keep the books honest, they lose money. Big money, even as they skimp on maintenance needs. Acela, the N’oreaster, MBTA, and DC’s subway system – NONE of them are self-sufficient and only exist because more and more taxpayer money is poured into them. So, if they have to be subsidized, where’s the ROI? REmember, that if a private company was running such systems, they’d HAVE to show a return on real investment – or go out of business.
Claims that transportation spending will cause the economy to grow, and thus yield higher tax revenues in the long run, are totally unsubstantiated. It might be true for some transportation spending, but certainly is not true for most of that spending. Transportation dollars going into maintenance and rehabilitation of existing infrastructure will not yield increased tax revenues. Nor will transportation dollars going for projects aimed at getting people to substitute one form of transportation for another.
…To grow the economy as the interstate highways did, transportation spending must produce new travel and shipping by making transportation faster, cheaper, and more convenient than before. But the people running our transportation bureaucracies today regard anything increased travel as bad because it might use more energy and produce more greenhouse gases. So they spent most if not all of that $70 billion on projects specifically designed not to increase travel, and thus it will not increase future tax revenues.
And I agree with his final thought:
Our entire federal government has become a giant Ponzi scheme, and the two parties fighting for control over who will get the last returns from that scheme before it collapses. While most of us can’t do anything about other parts of the federal debt and deficit, we can and should oppose further borrowing to supplement the highway and transit trust funds.
